Norway blocks sale of last private property on Arctic archipelago

Norway has blocked the sale of the last privately owned property on Svalbard, invoking national security considerations amid increasing activity from Russia and China in the Arctic Ocean.

Oslo’s centre-left government informed the owners of the Søre Fagerfjord property on the Arctic archipelago that they could sell it only with the approval of the Norwegian state after they suggested there had been Chinese interest in an acquisition.

“The owners of Søre Fagerfjord have said for a long time that they want to sell the property, and that they are open to selling to actors who could challenge Norwegian law on Svalbard,” said business minister Cecilie Myrseth on Monday. “It could interfere with the stability of the area, and potentially threaten Norwegian interests.”

Norwegian media have reported that one of the main owners of AS Kulspids, the company that owns Søre Fagerfjord, is a Russian woman who received Norwegian citizenship in the 1990s. The order banning the sale without Norwegian government approval applies to both AS Kulspids and its individual owners.

The Arctic is a site of growing geopolitical tension as countries vie to increase their influence over the “high north” region and exploit its abundant natural resources. Russia has militarised much of its far north while China has sought to increase its business and research activities in the region. Former US president Donald Trump offered to buy Greenland from Denmark.

Svalbard is Norwegian territory but there are Russian settlements and mining developments on the archipelago due to its unusual legal status. Norway owns most of the land, but Russia has four large properties there.

Søre Fagerfjord, to the south of the main town of Longyearbyen and the Russian settlement of Barentsburg, was put up for sale earlier this year for €300mn. The property includes 60 sq km of land including the small island of Reinholmen. Norway’s government offered NKr20mn (€1.8mn), and public broadcaster NRK said it had bid the same amount last week.

A lawyer for the Norwegian government has suggested the commercial value of the land is almost zero as it is difficult to reach and subject to strict environmental restrictions, according to local media. Oslo paid NKr300mn in 2017 for a parcel of land near Longyearbyen almost four times the size of Søre Fagerfjord that contained coal deposits and is much more accessible.

Myrseth warned that anybody prepared to pay a “disproportionately high price” for Søre Fagerfjord could be intending to challenge Norwegian law and national security.

“China is a possible buyer. China has shown great interest in the Arctic for a long time. If they can get a foothold up there, it would have great strategic significance for China,” Per Kyllingstad, a lawyer for the owners of the property, told local newspaper Aftenposten.

Norway’s intelligence services have warned about the risk to national security of a sale. Svalbard was named by Russian media after the 2014 annexation of Crimea as a possible starting point for a third world war, while Moscow has repeatedly tested Norway’s patience in recent months by flying flags and holding a pseudo-military parade on the archipelago.

The islands are demilitarised under the 1920 Svalbard Treaty, which gives Norway sovereignty and other states such as Russia the possibility to mine and have settlements.

Norway last week said it would open up blocks for exploration for deep sea mining close to Svalbard and elsewhere in the Arctic, in a move heavily criticised by environmental groups.

AS Kulspids did not immediately return a request for comment. The property remains advertised for sale on its website.